Constitutional Constraints, Statutory Pathways, and Implications for an Open Economy
February 2026 | Trade Policy & International Economics
- Introduction and Background
On 20 February 2026, the United States Supreme Court issued a landmark 6-3 ruling in Learning Resources Inc. v. Trump and V.O. Selections v. United States, holding that the International Emergency Economic Powers Act (IEEPA) does not authorise the President to impose tariffs. The decision, authored by Chief Justice Roberts and joined by two Trump-appointed justices — Neil Gorsuch and Amy Coney Barrett — alongside the three liberal justices, constrained one of the administration’s preferred instruments of trade coercion. Nevertheless, the ruling represented a procedural limitation rather than a wholesale repudiation of aggressive trade policy, as multiple alternative statutory authorities remain intact.
This case study examines three interconnected dimensions: (i) the constitutional and statutory architecture governing US tariff authority; (ii) the practical limits imposed by the Supreme Court ruling; and (iii) the economic consequences for Singapore, a small, highly open economy with deep structural dependence on global trade. - The Legal Architecture of US Tariff Authority
2.1 IEEPA: The Struck-Down Pathway
The International Emergency Economic Powers Act of 1977 grants the President broad emergency economic powers upon declaration of a national emergency. The Trump administration invoked IEEPA to impose the sweeping ‘Liberation Day’ reciprocal tariffs announced in April 2025, applying rates up to 145% on Chinese goods and a universal 10% baseline on most countries. The administration argued that persistent trade deficits constituted an extraordinary national emergency warranting executive action.
The Supreme Court rejected this reasoning by applying the major questions doctrine, which holds that executive agencies (and by extension, the executive branch) must have clear congressional authorisation before exercising authority of vast economic and political significance. The Court found that IEEPA’s legislative history provided no clear signal that Congress intended to delegate tariff-setting authority — a power the Constitution expressly vests in Congress — to the executive.
Key Finding The Court held that ‘an attenuated chain of inferences from scant legislative history cannot support a reading of IEEPA that includes the distinct power to impose tariffs.’ This language signals a structural constraint on executive unilateralism in trade, not merely a narrow statutory interpretation.
2.2 Remaining Statutory Pathways: The Tariff Toolkit
The ruling did not eliminate all executive tariff authority. President Trump immediately pivoted, invoking Section 232 of the Trade Expansion Act of 1962 to impose a 10% global tariff on all imports, demonstrating the depth of residual authority available. The following table summarises the principal statutory channels that remain operative post-ruling.
Statute Authority Trigger Condition Scope Status Post-Ruling
Section 232
(Trade Expansion Act 1962) Tariffs on national security grounds Commerce Dept. investigation finding threat to national security Specific sectors (steel, aluminium, semiconductors, pharma) Fully operative — not affected
Section 301
(Trade Act 1974) Retaliatory tariffs for unfair trade practices USTR investigation finding unreasonable burdens on US commerce Country-specific, sector-wide Fully operative
Section 201
(Trade Act 1974) Safeguard tariffs for import injury USITC investigation finding substantial injury to domestic industry Broad, non-country-specific Fully operative
IEEPA
(1977) Emergency economic measures Presidential declaration of national emergency Global, sweeping Struck down for tariff use
The fiscal implications are significant. The Tax Foundation estimates that the struck-down IEEPA tariffs would have generated approximately USD 1.4 trillion in revenue over the 2026–2035 period on a conventional basis. The remaining Section 232 tariffs are projected to raise only USD 635 billion over the same period — a USD 765 billion shortfall with material consequences for the administration’s fiscal planning, particularly given the projected USD 4.7 trillion revenue reduction under pending tax legislation.
- Singapore: A Small Open Economy Under Structural Pressure
3.1 Trade Dependence and Structural Vulnerability
Singapore presents an analytically instructive case for examining tariff impacts on a small open economy. With a trade-to-GDP ratio exceeding 300%, Singapore’s economic model is premised on frictionless participation in global value chains. The United States is one of Singapore’s most significant trading partners, and Singapore’s export profile — dominated by electronics, semiconductors, biomedical products, petrochemicals, and precision engineering — is precisely the category of high-value manufactures most exposed to US tariff regimes.
Prime Minister Lawrence Wong stated in April 2025 that ‘the era of rules-based globalisation and free trade is over,’ characterising the tariff episode as a structural rather than cyclical disruption. Crucially, Singapore maintains a free trade agreement with the US and imposes zero tariffs on US imports — and, by the administration’s own framing of ‘reciprocal’ tariffs, runs a goods trade deficit with the United States. This renders the application of the 10% baseline tariff to Singapore particularly anomalous.
3.2 Macroeconomic Trajectory: From Resilience to Recalibration
Singapore’s macroeconomic response to the tariff shock unfolded in three identifiable phases across 2025.
Phase Period GDP Growth Key Driver Policy Response
Phase 1: Front-loading Boom Q1–Q2 2025 +4.7% (Q2 YoY) Regional front-loading ahead of tariff implementation; AI-driven semiconductor demand MTI initially maintained 1–3% full-year forecast
Phase 2: Shock Absorption Q3 2025 +4.2% YoY AI electronics sustained growth; US shipments fell 30.7% in Q3 MAS eased monetary policy twice; MTI revised forecast to ~4% full year
Phase 3: Cooling Outlook 2026 onwards Growth expected to moderate IEEPA ruling provides relief but Section 232 tariffs persist; global demand softening Cautious reassessment of trade pacts; ASEAN integration deepened
Notably, Singapore’s 2025 GDP growth significantly outperformed initial expectations, reaching approximately 4% for the full year against an initial forecast of 1–3%. This reflected the paradox of trade disruption: front-loading activities by regional firms seeking to pre-empt higher tariffs generated a temporary demand surge that disproportionately benefited Singapore’s logistics and manufacturing hubs. However, the Ministry of Trade and Industry cautioned that this tailwind was transitory and that 2026 growth faces a more pronounced headwind as the tariff impact filters through global demand.
3.3 Sectoral Impact Analysis
The tariff exposure is not evenly distributed across Singapore’s economy. The following sectors bear the primary burden.
Electronics and Semiconductors
Singapore’s most significant export category, electronics accounted for 6.1% manufacturing expansion in Q3 2025 driven by AI-related demand. However, domestic exports to the US fell 28% year-on-year between April and August 2025 — a structural demand compression that AI semiconductor demand partially offset but did not reverse. The prospect of Section 232 semiconductor tariffs remains a live threat, as the administration has signalled potential sectoral investigations.
Biomedical Sciences
Pharmaceutical and biomedical exports constitute a growing share of Singapore’s NODX. This sector carries elevated risk from Section 232 investigations, which the administration had been expected to announce for pharmaceuticals. A provisional delay to allow pharmaceutical companies to negotiate exemptions created a temporary reprieve, but structural uncertainty persists. In Q3 2025, pharmaceutical exports declined, contributing to a 3.3% NODX decline for the quarter.
Wholesale Trade, Logistics, and Financial Services
Singapore’s role as a transshipment and logistics hub is indirectly exposed to tariffs through reduced regional trade flows. The Monetary Authority of Singapore noted that ‘prospects for global trade and GDP growth dimmed’ following the Liberation Day tariffs, with financial services and insurance exposed through suppressed global capital flows and investment sentiment. The MAS eased monetary policy in April and subsequently — reducing the rate of appreciation of the Singapore dollar NEER — reflecting the gravity of the external demand shock.
- Post-Ruling Implications for Singapore
4.1 Immediate Relief, Structural Constraint Remains
The Supreme Court ruling provides Singapore and other Asian economies with meaningful, if circumscribed, relief. The elimination of IEEPA tariffs removes the most legally expansive basis for imposing high tariff rates on broad country-specific targets. For Singapore, the 10% baseline tariff imposed via IEEPA would have been subject to revision under the ruling.
However, Trump’s immediate pivot to imposing a 10% global tariff under Section 232 authority — within hours of the ruling — confirms that the administration retains both the will and the statutory capacity to maintain elevated tariff barriers. The signal to Asian governments is clear: the ruling is a procedural constraint, not a policy reversal.
Analyst Assessment The ruling offers temporary procedural relief, not a policy reset. The political implications of antagonising the Trump administration are likely to weigh more heavily on Asian governments’ calculus than the legal status of any individual tariff instrument.
4.2 Singapore’s Strategic Recalibration
Singapore’s response has been characterised by diplomatic dexterity and economic diversification rather than confrontation. Several strategic adaptations are underway.
Deepening ASEAN integration: Singapore has accelerated engagement with the ASEAN Economic Community and the CPTPP framework. ASEAN’s combined GDP is projected to reach USD 4.3 trillion, providing an alternative export market as US demand contracts.
Supply chain diversification: Singaporean manufacturers are reorienting production and origin structures to reduce exposure to tariff penalties on US-bound goods, including through regional production networks and rules-of-origin optimisation.
Bilateral FTA leverage: Singapore’s existing US-Singapore FTA — which provides demonstrably reciprocal trade conditions — positions Singapore to pursue targeted negotiations for sectoral exemptions, particularly in pharmaceuticals and advanced semiconductors.
Digital trade infrastructure: Singapore’s investment in customs automation, digital trade documentation, and the Digital Economy Agreements (DEAs) framework provides a longer-term competitive advantage as trade patterns shift toward services and digital commerce.
Monetary accommodation: The MAS has adopted a more accommodative monetary stance by reducing the rate of Singapore dollar NEER appreciation, providing a degree of export competitiveness support during the adjustment period.
- Theoretical and Policy Lessons
5.1 Constitutional Economics of Trade Authority
The ruling in Learning Resources v. Trump illustrates the application of the major questions doctrine to trade policy — a doctrinal evolution with potentially far-reaching implications. By requiring clear congressional authorisation before the executive exercises authority of vast economic significance, the Court has rebalanced the constitutional delegation of trade power. This creates a structural incentive for future administrations to seek legislative authority for broad tariff regimes, potentially — though not certainly — increasing the transparency and accountability of US trade policy.
However, the Court’s intervention does not resolve the underlying congressional-executive tension. Congress has, over decades, progressively delegated trade authority to the executive through a succession of statutes. The Section 232 and Section 301 pathways were themselves products of congressional delegation. A more fundamental reform would require Congress to reclaim and restructure its constitutional prerogative over trade — an unlikely prospect given current political dynamics.
5.2 Implications for Small Open Economies
Singapore’s experience illustrates several structural vulnerabilities common to small open economies in an era of US trade unilateralism. First, even economies with demonstrably favourable trade balances with the US are not exempt from tariff exposure — revealing that the stated economic rationale (eliminating trade deficits) may be secondary to strategic or mercantilist objectives. Second, the front-loading effect of anticipated tariffs can produce a temporarily misleading demand surge that obscures underlying structural deterioration. Third, the diversification of statutory tariff instruments means that judicial curtailment of one pathway does not eliminate systemic tariff risk.
For Singapore, the episode underscores the premium placed on maintaining deep FTA networks, sustaining macroeconomic buffers, and developing high-value-added industries less susceptible to tariff disruption — such as financial services, digital trade, and AI-oriented semiconductors — as a hedge against recurrent trade policy volatility. - Conclusion
The Supreme Court’s ruling on IEEPA tariffs represents a significant constitutional moment, reaffirming congressional primacy over trade authority and constraining the executive’s most expansive tariff instrument. Yet its practical significance for countries like Singapore is tempered by the breadth of residual executive tariff authority under Section 232, Section 301, and Section 201. President Trump’s immediate pivot to alternative statutory authority within hours of the ruling underscored this point with deliberate clarity.
For Singapore, the ruling provides procedural breathing room rather than substantive policy relief. The structural reality — that the US has materially departed from the norms of rules-based free trade that Singapore’s economic model was designed to exploit — remains unchanged. Singapore’s response, characterised by institutional resilience, supply chain adaptation, and deeper regional integration, reflects the pragmatic statecraft of a small state navigating great-power trade conflict without the luxury of economic scale or political leverage.
The episode’s enduring lesson for trade economists and policymakers is that in an era of executive unilateralism, the resilience of a rules-based international trade order depends not merely on the legal architecture of any single country’s constitutional constraints, but on the collective willingness of trading nations to maintain and enforce multilateral norms — a willingness that remains, at present, significantly in deficit.